The ABC Inventory System

The ABC Inventory System

Under the ABC inventory system, inventory items can be categorized into three classifications. "A", "B", and "C". Here "A" classification refers that the inventories are highly useable and need regular monitoring. "B" classifications refer that the inventories are medium useable and need automatic monitoring and "C" classifications always require less monitoring as they have limited uses.

Pros of the ABC Inventory System:

The main focus of the ABC inventory system is to reduce the cycle counting effort and ensure efficiency. So the classifications of inventory tell us about the uses of the inventories and help to determine the percentage of focus given in auditing the inventory. ABC inventory system closely monitors the "A" inventories as they never run out of stock.

Cons of the ABC Inventory System:

The only problem with the ABC Inventory system is that the classifications should be revised over time as the inventory uses may vary over time.